| Tue 16 Aug 2005, 16:57 | | Combined Motor Holdings Limited - Acquisition By C |
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Combined Motor Holdings Limited - Acquisition By Cmh From Forza (Proprietary)
Limited (`Forza`) Of Certain Franchise Outlets And Associated Assets
COMBINED MOTOR HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1965/000270/06)
Share code: CMH ISIN: ZAE000001541
(`CMH` or `the Company`)
ACQUISITION BY CMH FROM FORZA (PROPRIETARY) LIMITED (`FORZA`) OF CERTAIN
FRANCHISE OUTLETS AND ASSOCIATED ASSETS
Introduction
Further to the cautionary announcement of 8 July 2005, PricewaterhouseCoopers
Corporate Finance (Proprietary) Limited is authorised to announce that CMH
has agreed to acquire from Forza:
the assets and liabilities of:
- Investment Cars, Bryanston;
- Investment Cars, Hatfield;
- Lamborghini, Johannesburg;
- Lyndhurst Auto, Melrose Arch;
- Peugeot South, Johannesburg;
- Lyndhurst Autobody, Johannesburg;
- Waterworld;
- Monaco Leisure; and
- Boating Distributors.
the shares and loan accounts of:
- Investment Cars (Cape)(Proprietary) Limited.
(jointly `the acquisition`).
Terms of the acquisition and consideration
In terms of the acquisition agreement, an amount ranging between R185 million
and R220 million will be payable by CMH, such payment range to be dependent
upon the Forza Group consolidated profits in respect of its financial year
ending 31 August 2005. The purchase consideration is to be funded out of the
Company`s internal cash resources. The effective date of
the acquisition will be the later of 1 October 2005 and the first day of the
month following the month during which all of the conditions precedent
referred to below are fulfilled.
Nature of business of Forza
Forza has a number of retail motor dealerships and holds the franchises for
the sale of products to the automotive markets, specialising in particular in
the sale of BMW, Mini, Peugeot and Lamborghini products. Through Investment
Cars, Ashleys and Bloomsbury, the Company markets exotic and luxury used
vehicles. Forza is also a wholesale distributor and retailer of marine craft
and all-terrain vehicles, as well as servicing and supplying related parts
and accessories.
Rationale for the acquisition
CMH is a significant retail motor dealer in the South African market. The
acquisition will provide additional expansion opportunities within the motor
industry. The marine and leisure business share many characteristics similar
to that of CMH`s existing retail market and will enable CMH to establish a
presence in that market.
Conditions precedent
The acquisition is subject to conditions usual in transactions of such nature
and, in particular, the following:
* the approvals to the extent necessary of JSE Limited (`JSE`), the
Competition Commission and any other required regulatory authority; and
* the completion of a legal and financial due diligence to the satisfaction
of CMH.
Pro forma financial effects
Based on the published audited financial results of CMH for the financial
year ended 28 February 2005, and those of Forza for the year ended 31 August
2004, the pro forma financial effects of the acquisition on CMH`s earnings,
headline earnings, net asset value and net tangible asset value per share are
set out below. The pro forma financial information has been prepared for
illustrative purposes only and because of its nature may not give a true
picture of CMH`s financial position and results of operations. The pro forma
financial effects are the responsibility of the directors of CMH.
Per CMH share Before the After the
acquisition(1) acquisition(2) %
Earnings (cents)(3) 546,1 558,3 2,2
Diluted earnings (cents)(3) 526,4 538,2 2,2
Headline earnings (cents)(3) 561,1 613,7 9,4
Diluted headline earnings (cents)(3) 540,9 591,6 9,4
Net asset value (cents)(4) 1 754,0 1 754,0 -
Tangible net asset value (cents)(4) 1 636,0 1 232,2 (24,7)
Weighted average shares in issue (`000) 20 649 20 649 -
Number of shares in issue at
year-end (`000) 20 788 20 788 -
Notes:
1. Based on the audited results of CMH for the year ended 28 February 2005.
2. Reflects the effect on CMH for the year ended at 28 February 2005.
3. The effects on earnings, diluted earnings and headline earnings per share
are based on the following assumptions:
- the acquisition was effective 1 March 2004;
- the purchase consideration of R185 million was settled out of available
cash resources which earned interest at an average after-tax rate of 5% per
annum for the year ended 28 February 2005;
- goodwill of R84 million arose on the acquisition. In terms of IFRS 3, the
assets and liabilities acquired will be accounted for at fair value.
Consequently, the value attributed to goodwill may differ from R84 million. In
terms of South African Statements of Generally Accepted Accounting Practice,
business combinations after 31 March 2004, goodwill is subjected to an annual
impairment assessment; and
- transaction costs of R350 000.
4. The effect of net asset value and tangible net asset value are based on
the following assumptions:
-Net tangible asset value per share of R256 million after the acquisition is
based on the gross purchase consideration for Forza of approximately R185
million and its net tangible asset value of R101 million at 31 August 2004.- the
acquisition was effective 28 February 2005;
- goodwill of R84 million arose on the acquisition. In terms of IFRS 3, the
assets and liabilities acquired will be accounted for at fair value.
Consequently, the value attributed to goodwill may differ from R84 million. In
terms of South African Statements of Generally Accepted Accounting Practice,
business combinations after 31 March 2004, goodwill is subjected to an annual
impairment assessment; and
- transaction costs of R350 000.
Categorisation of the acquisition
At the date of this announcement, the acquisition has been classified as a
Category 3 transaction in terms of section 9.5(a) of the JSE Listings
Requirements.
Withdrawal of the cautionary announcement
As the terms and financial effects of the proposed acquisition have been
announced, shareholders need no longer exercise caution when dealing in their
CMH shares.
15 August 2005
Durban
Sponsor
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Attorneys
Shepstone & Wylie Attorneys
Date: 16/08/2005 04:24:26 PM
Produced by the JSE SENS Department
